South Africa's five-year loan of R2.4-billion to crisis-hit Swaziland was on condition that Swaziland implements certain political and governing reforms, Finance Minister Pravin Gordhan said on Wednesday.
The loan guarantee was on condition that the government of Swaziland undertakes confidence-building measures, guided by the Joint Bilateral Commissions for Co-operation (JBCC) agreement, which promoted democracy, the respect of universal human rights and the rule of law, Gordhan told media in Pretoria.
"In light of the current dialogue between the two countries, the government of Swaziland will give renewed impetus to these by broadening the dialogue process to include all stakeholders and citizens of the Kingdom of Swaziland," said Gordhan.
This means Swaziland would also have to allow parties to the Swaziland dialogue to determine appropriate reforms needed, and agree on milestones and time frames for the dialogue process.
Swaziland would also have to agree that these dialogues take place in a "conducive environment that is open and enjoys legitimacy amongst the people of Swaziland and the region".
The JBCC agreement also speaks to the promotion of economic and social development, multilateral co-operation, good governance, credible and effective leadership, and the development of a strong civil society.
Swazi activists had called on Pretoria to make any bailout conditional on democratic reforms in the tiny kingdom, where political parties have been banned since 1973.
Gordhan did not directly mention whether the unbanning of political parties, the releasing of political prisoners and planning democratic elections in Swaziland were part of the political reform agenda.
When asked, he said he hoped Swazi authorities would "create conditions necessary in order to have a proper open and fully participatory dialogue in this situation".
The loan was also premised on that Swaziland implements a package of fiscal and financial reforms, including the introduction of a Public Finance Management Bill and protecting the peg between Swaziland's lilangeni currency and the rand.
Gordhan said that country's government would have to table in parliament its Public Finance Management Bill by October, implement a fiscal adjustment road-map by February 2012, and agree on a priority spending programme.
A commitment was also made to help Swaziland implement the reforms that had been identified.
Questioned how much Swaziland had actually asked for, Gordhan said: "They asked for R2.4-billion and they got R2.4-billion."
He said the money was not tax-payer's money, but was provided by the South African Reserve Bank on a 5.5 percent interest rate.
The loan will be made available in three equal tranches, starting in August once negotiations with the relevant parties have been finalised.
Gordhan said the second and final payment would be made in October 2011 and February 2012.
"Repayment of the loan will take the form of a debit order against the SA Customs Union's (SACU) account that is held by the reserve bank on behalf of Swaziland," he said.
Sacu is a customs sharing scheme between South Africa, Botswana, Lesotho, Namibia and Swaziland, which pool their customs revenue then divide it up among the countries.
Swaziland has been battling to stay solvent after losing 60 percent of its revenue from the regional customs union, the government's main source of income, last year.
The government froze public-sector salaries and asked unions to accept pay cuts, leading to mass protests that were violently put down by security forces.
Gordhan further blamed the crisis in Swaziland to the delay in taking steps to adjust spending to the new environment, and the lack of fiscal and broader public sector reforms
It was the government's expectation that the loan would not be misused.
"Government's anticipation is that money will not be used for purposes that won't be acceptable (to us) or in a right-minded society," said Gordhan.